Aviate US Summary

The authors of the content on this page from Sept 2012 to June 2017 are:
Market Commentaries: Gary Paulin, Ameet Patel, Paul Moran, Douglas Morton, Oliver Sherman, Ben Brownette, Rob Arnott, James Santo, Neil Campling
Research: Ameet Patel, Paul Moran, Douglas Morton, Oliver Sherman, Rob Arnott, Neil Campling

S&P +1.19% (2104.1), D +0.94% (17828.8), N +1.18% (4703.9), CL1 -1.09% (46.08), Copper -0.26% (231.15), Gold +0.03% (1134.14) 10YrYld +0.03 (2.1709), DXY -0.02% (96.93), Vix -6.10% (14.15).

The S&P closed up 60bps from the European close consolidating around the day’s highs over the last hour of trading. Volume a little lighter, though, on this move, off close to 10% from Friday at 6.8bln shares, still below avg of 7bln. Dollars traded off 13% to $270bln, $10bln below est. About 85% of volume printing to the upside.

A strong risk-on day to start November. The move aided on economic data that seemed to thread the needle between good enough not to torpedo a rate hike but not too hot to raise inflation concerns. Rates to six week highs and now trading implies about a 52% chance of a December rate hike, up incrementally from 50%. Some m&a out there today: VISA -3% acq’ing Visa Europe for up to $23.4bln, DYAX +28.4% to be acq’d by SHIRE -1% for at least $5.9bln, CONAGRA +90bps selling Private Brands to TREEHOUSE -5.6% for $2.7bln, MEDASSETS +30.9% to be acq’d by Pamplona Capital for $1.88bln, CONSTANT CONTACT +22% to acq’d by ENDURANCE -16.6% for $1.1bln. Despite crude trading down about 1%, energy among the leading sectors. Financials also strong following the move in rates. Biotech up nearly 4% on the biggest day in 2 weeks for the IBB with one announced deal in the space and continued speculation of the next tgts. Certainly an element of a squeeze with most-shorted up 3.3% on the day steadily gaining steam over the S&P as the day wore on. All 5 of the top performing sub-sectors today noted below still down double-digit percentages on the year. Unsurprisingly given where we saw strength today, defensives and yield proxies the big laggards. No major blowups on earnings this morning and some decent higher reactions: DIAMOND OFFSHORE +11.2%, ESTEE LAUDER +8.1%, CARDINAL HEALTH +4.8%, CLOROX +3.1%, LOEWS +3.1%, KBR +2.9%….VISA -3%, DOMINION RESOURCES -1%, CHURCH & DWIGHT -80bps, SYSCO -50bps.

OUTPERFORMERS: Coal +16.6%, Oil Drillers +5.9%, Integrated Oil +3.3%, Oil Services +3.2%, Steel +2.9%

UNDERPERFORMERS: Consumer Services -20bps, Food/Bev/Tobacco unch’d, Telecom +15bps, Chemicals +30bps, Retailers +30bps

COMMODS: Sugar +4.1%, Cocoa +1%, Aluminum +60bps, Gasoline +20bps, Cotton -5bps…..Nickel -3%, NatGas -2.8%, Wheat -2.7%, Coffee -1.8%, Corn -1.5%

ECO: Construction Spending m/m +0.6% vs 0.5% est, ISM Manf 50.1 vs 50.0 est, ISM Prices Paid 39 vs 39.8 est

AFTER-HRS NEWS/MOVES:

FITBIT -7.4% q3 eps/revs beat and raises fy rev forecast but selling 14mm shares, half for co./half for hldrs
QUALYS -11.6% q3 beats but cuts fy revs outlook
TEXAS ROADHOUSE +4.1% q3 eps misses but comps beat
AIG -2% q3 misses low end of estimates, sees further job cuts
TENET HEALTHCARE -5.3% q3 eps/revs beat but mid-point of fy range below estimates
AVIS BUDGET -8% q3 miss, cuts fy view
LUMINEX +8.9% eps/revs beat, raises fy view

ACTIVE TODAY:

TMT
MEDASSETS +30.9% being acq’d for $1.88bln by Pamplona Capital
HEWLETT PACKARD ENTERPRISES -1.6% first stay split off
CONSTANT CONTACT +22% being acq’d by ENDURANCE -16.6% for $1.1bln
ACTIVISION -0.6% d/g @ BofA/Merrill
ARISTA NETWORKS -4.1% p/t lowered @ Cowen
FAIRCHILD +2.7% Infineon said to be front-runner to acq co.

CONSUMER
COOPER TIRE +1.9% q3 eps/revs beat
CHURCH & DWIGHT -0.8% q3 beats, raises fy but staples come for sale on broader rally
TREEHOUSE -5.6% buying private label biz from CONAGRA +0.9%
ESTEE LAUDER +8.09% q1 beats est
CLOROX +3.1% q1 eps/revs beat, fy revs could match high end of range
CHIPOTLE -2.5% shuts stores in Pacific Northwest on E. coli fears
AVIS +4.7% positive mention in Barron’s
WENDY’S +6.2% u/g @ RBC
SYSCO -0.5% eps/revs inline w/ est
DICK’S SPORTING GOODS -0.1% d/g @ Monness Crespi
KATE SPADE +1.8% d/g @ Monness Crespi
WHITEWAVE +2.5% defended @ Morgan Stanley
UNITED NATURAL FOODS +1.6% extends partnership with Whole Foods

FINANCIALS
VISA -3% q4 eps a rare, albeit slight miss; $23.4bln deal to acq Visa Europe seen as steep price
KKR +6.9% added to focus list @ Citi
JANUS +2.5% Soros said to pull $500mm investment from Bill Gross strategy

HEALTHCARE
DYNAX +28.4% to be acq’d by SHIRE for $5.9bln
VALEANT +7.2% d/g @ Goldman; no new smoking gun in report @ Citron
ABBVIE +6.4% u/g @ Morgan Stanley
CARDINAL HEALTH +4.8% q1 strong beat, boots view
BIOMARIN -0.2% FDA questions on handling of muscular dystrophy drug

INDUSTRIALS
EATON +1.5% d/g @ Bernstein
KBR +2.9% q3 eps beats while revs do not

ENERGY
DOMINION -1% q3 miss, midpoint of q4 range falls below est
KINDER MORGAN -2.7% cautious mention in Barron’s
DIAMOND OFFSHORE +11.2% q3 eps beat and announces new work with Petrobras

SERVICES
TOWERS WATSON +2.3% q1 beats high end of estimates
ECOLAB -2% q3 inline but cuts forecast on f/x